As distributed resources change the way electricity flows on the power grid, energy researchers are borrowing a concept from hydrology to study how the increasingly complex system works.

The U.S. Department of Energy is preparing to award $10 million in grants for research related to “energy sheds.” The term may conjure images of small wooden buildings sheltering whirring generators, but it’s actually a play on the concept of a watershed.


A watershed is a geographic area where all the water flows into one common outlet, such as a river. An energy shed, then, looks at how power is created and consumed within a defined area. The DOE’s definition, borrowed from a 2016 report by John C. Evarts, is “an area in which all power consumed within it is supplied within it.”

“It’s a very multifaceted and layered concept,” said Austin Thomas, the co-author of a paper on energy sheds published last year in Energy Research and Social Science. “There’s still a bit of flexibility and ambiguity in defining it.

Thomas’ paper uses a more expansive definition: “The geographic area that contains the land, infrastructure, people, profits and environmental impacts connected to final energy consumption.”


Applying the concept could be especially useful now as more communities, states and regions move away from reliance on centralized, fossil fuel-burning generating facilities in favor of more distributed, renewable energy sources.

“Understanding the implications of more locally-based generation may lead to a more efficient and resilient power system,” the DOE’s Office of Energy Efficiency and Renewable Energy said in its description of the funding opportunity.

“The DOE recognizes that the future of energy is not the past of energy,” said Gretchen Bakke, a senior fellow at the Institute for Advanced Sustainability Studies, and a participant in last year’s energy shed workshop. “They’re trying to figure out how to involve local communities, and work around utilities in their present form, to experiment, but also lay some real pragmatic plans. What the size of a shed would need to be, what the generation capacity would need to be, how those would all work together.”

The concept “digs deep into the locational issues associated with energy,” said Paul Hines, the vice president for power systems at Energy Hub, which develops software for managing distributed energy. “When you purchase energy, it comes from many different sources across the grid with impacts on all of those places. How can we understand the locational impacts of our energy choices? While many details are unclear, systems are needed to coordinate distributed energy resources and allow people to participate.”

Breaking down large regional- or national-scale energy systems into smaller energy shed areas could help in “understanding the trade-offs of producing and delivering energy within that boundary versus importing or exporting energy into or out of that region,” said Clayton Barrows, a member of the Grid Operations Planning Group at the National Renewable Energy Laboratory.

Under the DOE funding opportunity, the energy sheds proposed for investigation must be confined to a “discrete geographic area” in which renewable energy sources supply a large portion of demand, but in which grid capacity constraints are curtailing deployment of additional generation.

The area served must also have substantial deployment of interactive smart meters, a critical data-gathering tool.

In addition to gathering information about resiliency, reliability, affordability and sustainability, the energy shed projects are also supposed to address issues of equity and inclusion, including job creation, environmental exposure, and transparency.

“The energy system of today was not constructed with the needs of rural and urban communities considered equally, or with climate change or low-income communities in mind,” Thomas said. “So what is the direction of the future? And what are the shortcomings of existing systems?”

One of the biggest points of disagreement and ambiguity around energy sheds is how to define the boundaries — what do you include or leave out? For example, Thomas said, you might reasonably group all of the New England states together as one energy shed because they are all on the grid managed by ISO-New England.

But if you include the natural gas used to generate power, and account for where that fuel comes from, you have to expand the boundaries, because gas is not produced in any quantity in the region, he said.

Importantly, an energy shed is not the same as an energy island or a microgrid, both of which are designed to function singularly, Bakke said.

“It’s not like we’re going to live in these little energy pods and not be connected to each other anymore,” she said. “If you get an energy shed that serves 80% of the needs of a particular community, the other 20% will be balanced from outside.”

The DOE expects to fund two to five projects. The awardees will be announced in September.